CSR reporting

New developments with EU in the front line

CSR reporting has largely been based on voluntary reporting by enterprises. However, the times are changing. In April 2013, the EU Commission presented a proposal for a directive on the disclosure of non-financial information by companies.

The proposal was approved by the Parliament on 16 April 2014 and by the Council on 24 September 2014. This amendment to the Statutory Audit Directive concerns large public-interest entities (listed companies, credit institutions, insurance companies) who employ over 500 people and whose turnover exceeds EUR 40 million or balance sheet exceeds EUR 20 million.

According to the Directive, undertakings must publish along the management report a statement on their policies on environmental matters, social and employee related matters, respect for human rights, anti-corruption and bribery matters. The statement should include a description of the company's business model and explain related risks and the management of these risks.

The statement may be a part of the management report. Moreover, the statement may be delivered as a separate report that is based on the international reporting framework provided that it fulfils the information requirements of a statement and that it is published with the management report or within six months after the balance sheet date, on the undertaking's website, and is referred to in the management report. The “comply or explain principle” is applied to the statement.

The Directive also contains an obligation for undertakings that issue securities to report on the company's diversity policy and its implementation and results in the corporate governance statement. The Directive mainly concerns large undertakings that issue securities (250 employees); small and medium enterprises are excluded from the scope.

What comes to country-specific tax reporting, the Commission is required to monitor and report on the progress of OECD projects and the implementation of the provisions corresponding the Capital Requirements Directive and the Statutory Audit Directive. With the report, the Commission must make its proposal as potential country-specific tax reporting.

The Directive must enter into force in Finland by 6 December 2016. The reporting requirement would therefore concern the financial year 2017 at the earliest.